Section 95

Subsidy Campaign Update

At the 2007 annual meeting in Winnipeg, members endorsed Resolution 3 (Windmill Line Co‑op). called for CHF Canada to campaign for the continuation of government funding of rent-geared-to-income subsidies beyond the end of current housing co‑op operating agreements, The resolution called for a report to members at the end of 2007.

The need for ongoing government subsidy is of concern to all co‑ops but is particularly urgent for housing co‑ops funded under the federal Section 95 program, who have seen their subsidies decline significantly over the past 20 years.

In the past, working with members who relentlessly lobbied the former Liberal government, our principal accomplishment was to persuade the federal government to amend the Section 95 program financing formula, so that mortgage payments and subsidy would decline on a “dollar for dollar” basis when co‑op mortgages renewed at a lower rate. This change was announced by then-Minister Joe Fontana at CHF Canada’s 2005 annual meeting ( Edmonton ). We were not able to convince the government that co‑ops should receive new subsidy dollars to compensate for earlier reductions.

The subsidy issue is an issue for many co‑ops, but is of particular concern to housing co‑operatives in Toronto . Accordingly, in February 2007, CHF Canada agreed to significant financial support for efforts by the Co‑operative Housing Federation of Toronto to mount a local lobby. We have now agreed that this support will be continued into 2008.

Dealing with Canada ’s “New Government”

In 2007, one key obstacle confronting us on this issue was that the Conservative government was new to this issue. As well, both the government and the opposition Liberals now view “affordable housing” as a field of provincial jurisdiction. Although both parties seem willing to use the federal spending power (for example, to provide federal trust funds that the provinces can use for housing programs), neither has shown an interest in developing direct federal programs to build or to further support affordable non-profit or co‑operative housing.

In July 2007, CHF Canada representatives met with the Minister Responsible for CMHC, Monte Solberg, as part of a delegation of representatives from Canada ’s co‑operative sector, including the Canadian Co‑operative Association and the credit union movement. As well as overall housing need in Canada and the co‑operative sector’s willingness to help address it, we told Minister Solberg that the Section 95 program’s earlier funding formula had left many co‑ops unable to meet the need for housing charge assistance for their member households. The Minister expressed his support for co‑operative housing, and agreed to ask his officials for a report on the current financial situation in Section 95 co‑ops, including information on the loss of affordable units over the past several years.

Following this meeting, CHF Canada met separately with the Minister’s senior policy advisor to further clarify and explain the Section 95 funding issue.

At the end of July, we re-launched Advocacy Online. This tool, first used in the 2006 federal election campaign, allows co‑op members to send electronic messages to Members of Parliament. The subsidy issue is a key component of the suggested Advocacy Online messaging.

The Section 95 “Existing Tools”

As summer came to a close, several Toronto housing co‑ops (organized by the Co‑operative Housing Federation of Toronto) wrote to the Agency for Co‑operative Housing, setting out their difficult financial situations and requesting addition funds to provide housing charge assistance. The purpose of this initiative was to determine whether the “existing tools” available to the Agency (from CMHC) could address financial difficulties that were subsidy related. As expected, and notwithstanding its best efforts, the Agency was unable to address this matter within the current CMHC toolkit for Section program solutions for co‑ops in difficulty – the only toolkit there is.

The Speech From The Throne (October)

In September, as part of the lead up to the new government’s Speech from the Throne, we met with and briefed senior officials in the Prime Minister’s Office on the issues facing member co‑ops. Although our main focus was asking for a general commitment by the government to demonstrate federal leadership in addressing Canada ’s affordable housing shortage, we again raised the Section 95 issue, and suggested that a relatively small amount of additional subsidy could be used economically to provide many more affordable units within existing co‑ops.

On September 27, as a key part of an affordable housing campaign coalition with the Canadian Housing and Renewal Association and others in the non-profit housing sector, we participated in a media event. Our collective message was twofold: first that, if current federal spending on housing is simply continued, additional units can be built. Secondly, we again suggested that additional subsidies (from existing levels of federal spending) could be used to increase the number of affordable units in existing housing co‑ops – and especially to replace the affordable units lost in the Section 95 program.

Because we were not optimistic that “housing” would be mentioned in the government’s October Throne Speech, we were pleased that this work paid off. For the first time in many years, the Speech contained a reference to Canadians’ concern about homelessness and the lack of affordable housing. We believe that co‑op members’ and our own organized lobbying efforts were indispensable to achieving this.

We publicly congratulated Minister Solberg for this commitment with an advertisement in the Hill Times. The advertisement indicated that CHF Canada was ready to help the government address Canada ’s affordable housing shortage.

On November 20, we participated in the CCA/Credit Union Central Parliament Hill Lobby Day, and used the occasion for a separate set of meetings between our president Ken Elliott and targeted federal Members of Parliament. These also focused on our willingness to follow up with the government on its Throne Speech reference.

The Core Need Campaign

On November 21, we led a media event in Ottawa (with supporting media releases in Toronto and Vancouver ) that focused on the nearly four million Canadians in “core housing need”. This was coupled with an appearance later that day before the Senate Committee on Social Affairs by the Canadian Co‑operative Association, CHF Canada, the Canadian Housing and Renewal Association, and the Toronto Community Housing Corporation. Again, as well as addressing Canada ’s overall shortage, our testimony focused on the ability of existing co‑ops to provide more affordable homes if financial resources were made available.

The Section 95 Proposal

We followed up the Throne Speech and the Senate Committee appearance with a specific two-step proposal to the government to address the subsidy shortfall in Section 95 co‑ops. The proposal suggested that a relatively small amount of additional subsidy funding within the Section 95 program could add as many as 10,000 affordable homes.

This proposal – which was focused only on Section 95 co‑ops – was shared on a confidential basis with the Minister’s political advisors, and key senior officials. Just before the House of Commons rose for Members’ holidays, we met with the Minister’s senior policy advisor to further promote this approach as an affordable way for the federal government to continue to support federally sponsored Section 95 co‑operatives.

Where We Stand

What were the main things accomplished during 2007?

By far the most significant was the inclusion of “affordable housing and homelessness” in the government’s Speech from the Throne. This was the result of targeted, visible public relations and private lobbying by a strong and united coalition of the leadership of housing associations, supported by regional efforts especially in Ontario and British Columbia . The Throne Speech reference provides a background against which we were able to prepare and submit a specific solution to the financial difficulties faced by many Section 95 co‑ops. As the year drew to a close, we had obtained the government’s commitment to respond to this proposal early in 2008.

A second key accomplishment was informing and focusing Minister Solberg’s attention on the subsidy issue. We believe also that this is now recognized by the Minister’s staff as a challenge for the federal government, as these are co‑ops that remain under federal administration (through the Agency) in most of Canada .

Third, with help from Toronto co‑ops and CHFT, the “existing tools” (Section 95 program guidelines) have been eliminated as a defense for federal inaction on the subsidy shortfall. This was a significant step forward in our ability to persuade federal politicians and officials that new approaches will be necessary.

Where do we go from here?

We know that at least three external factors will shape our continued work in 2008 to find additional federal subsidies to help support existing and new low-income co‑op members.

First, the Throne Speech will continue to serve as reference point for federal activity in the housing field. We hope that our proposal for additional subsidy will find support – and we expect the government’s response by the end of February.

Other political factors are also at play. In February, provincial housing ministers will meet in British Columbia, providing an opportunity for the federal government – if it chooses – to take on a stronger and more direct role in encouraging provinces to support new affordable housing and make better use of existing developments.

It is safe to predict as well that some provinces will be looking for ways to deliver more affordable units. In 2008, we expect to spend some time attracting the attention of the Ontario government to the opportunity for new subsidized homes that is available in Section 95 co‑ops.

Finally, as the year begins, there is already speculation that a federal election will be called, possibly at the time of the federal budget (spring). Working with our regional partners, and relying on the direction we have received from members at recent annual meetings, we have already developed most of our election campaign platform. The Section 95 issue forms a key part of our platform.

Section 95 Campaign Update

Many housing co‑ops funded under the federal section 95 co‑operative housing program have seen their ability to subsidize low-income members decline as their subsidies from the federal government drop. In 2007, two Toronto-area housing co‑ops asked the Agency for Co‑operative Housing, which administers federal co‑op housing programs in some provinces, for assistance with additional RGI subsidy. This initiative was to see whether the “existing tools” used by CMHC for Toronto Women’s (see below) could be available to other Section 95 co‑ops that did not have severe financial difficulties.

The Agency replied:

“Unfortunately, there is no process or program that we can use to provide more income-tested assistance to your co‑op in the absence of other problems. The tools we have available are to help co‑ops in serious difficulty – co‑ops that don’t have enough money to do necessary repairs or capital replacements or co‑ops that have run out of money and can’t pay their mortgage or taxes. In order to qualify for these workout tools, you would need to be in one of these two situations:

• have operating deficits already, or
• be in a deficit position once you have included payments on a second mortgage, should that be needed to cover repairs or replacements you cannot pay for from your own funds.

As you point out in your letter, your co‑op is well managed and financially healthy so you would not be eligible for these workout tools. Your challenge, a much reduced amount of money annually for income-tested assistance, is of quite a different nature.”

The position is quite clear. Unless there are "other problems" CMHC will not provide funds for additional income-tested assistance.

CHF Canada has been meeting with federal Members of Parliament and government officials, urging them to provide increased assistance to existing Section 95 housing co‑ops, to enable them to house more low-income members. This would be a simple way to provide more affordable housing. We are also approaching provincial governments about making rent supplement funds available. CHF Canada has launched a campaign with the Canadian Housing and Renewal Association and other housing partners, urging the government to help the over three million Canadians living in core housing need.

CHF Canada ran this ad in Ottawa ’s the Hill Times in the week of National Housing Day.

CMHC’s Enhanced Assistance Solves Subsidy Crisis for a Toronto Co‑op

Toronto Women’s Co‑op will receive an extra $55,027 in temporary assistance from CMHC to provide subsidies to members that need them. The money, which will be provided over the next seven years, will be used by the 28-unit Section 95 co‑op to replace subsidies that were lost because of the formula used by CMHC to calculate assistance.

The extra subsidy is part of a refinancing package that the co‑op needed to make urgent repairs to its outside staircases. The subsidy will come from so-called “enhanced assistance” – a pool created with unused subsidy dollars returned by co‑ops across Canada.

In the past, co‑ops have been reluctant to apply for enhanced assistance, fearing that the money would be linked to unacceptable conditions. But Toronto Women’s, for example, will raise housing charges by only 2.5% for the first two years, then 2% per year after that. The co‑op has also agreed that, for the time being, no households that need subsidy can be accepted for membership.

For Nick Sidor, CHF Canada’s Director Corporate Affairs, the use of enhanced assistance may be a breakthrough in the treatment of Section 95 co‑ops by CMHC. “In agreeing to these conditions, the co‑op has put members first, and eased a lot of hardship and stress.”

“Most other Section 95 co‑ops have already raised their housing charges, and stopped accepting new members who need subsidy,” says Sidor. “For co‑ops with urgent subsidy needs, CMHC’s flexibility to provide enhanced assistance may offer a way out.”

Gaye Hachie, Toronto Women’s manager, sees the funding as a mixed blessing, describing the new money as a “band-aid”. “It is assistance, and we’re grateful for it, but it doesn’t answer the big picture.” Toronto Women’s has already turned away three families that need subsidized housing.

Sidor says that Toronto Women’s Co‑op has been a leader in the struggle to win affordable housing charges for low-income members. Thanks to members’ pressure, he says, two of the three key issues in the Section 95 campaign may have been solved.

“CHF Canada members pressed the previous minister to approve a new formula to calculate Section 95 subsidies,” he says, “and that was accomplished in 2005. Members asked for funding to make sure that members who needed subsidies could get them, and that is what has happened to Toronto Women's.”

Co‑ops that are facing an urgent financial crisis because of lack of subsidy should contact the Agency for Co‑operative Housing, say Sidor.

CHF Canada is providing other advice for Section 95 housing co‑op (pdf) to help them deal with financial problems caused by the Section 95 subsidy problem.

Background

Many Section 95 co‑ops have been struggling to manage their income-tested assistance – the subsidy they get to help low-income households with their housing charges. Subsidy is scarce because of low mortgage interest rates and the way subsidy has been calculated over the years.

A resolution at the 2006 AGM in London , Ontario , called on CHF Canada to remind the federal government to retroactively apply the funding formula fix to all Section 95 housing co‑ops. The resolution also asked that we continue to urge the government to restore the subsidy taken from Section 95 housing co‑ops and their low-income members when the flawed mortgage renewal formula was applied.